Probably your TFS server belongs to the same domain/network as the computer you use Git-TF on.

If this is the case, please make sure that the HTTP_PROXY and HTTPS_PROXY environment variables are not set. If they are, you could clean them up by using
set HTTP_PROXY=
set HTTPS_PROXY=
commands in the command prompt.

It looks like these variables are needed only if you connect to a TFS server/service out of your network, e.g. in the cloud.

I'm using Team Foundation Service (Microsoft's hosted service) rather than Team Foundation Server. Those variables are not set and I don't need a proxy server to connect to the service. It is definitely connecting as Team Foudation Service sends me a security
alert email if I enter an incorrect password into git tf multiple times.

Checking my bash history I was in fact using $/YYYY however. I must have been doing something else wrong but really not sure what - either that or perhaps there was a temporary problem with Team Foundation Service.

A colleague has also tried using git-tf and is experiencing the same problems - even when using the Mac and PC which work for me. The log file from my pc contains the following (user/tfs account names modified):

Presumably it's a problem on the TFService side but not sure what. Configuring basic credentials is straightforward and has definitely been done for this user. Is there any other configuration that could be at fault? If not, should I raise
it with Microsoft as a potential bug in TFService?

Can we get the exact command line and the full log related to your colleague issue? I do understand that you do not wish to publish them widely, but is it acceptable for you to send this information to my private e-mail address
arukhlin@microsoft.com? I tried to reproduce the issue with my visualstudio.com account, but the only situation when I got similar behaviour was when I entered a correct Live ID, but a wrong password.

Could you also try the following:
1. In the user Profile>Credentials set the secondary User name as a simple identifier, e.g.
JohnDoe
2. Set the password to simple word (8-32 characters without special simbols), e.g.
thepassword
3. Try to execute the git tf command with these new settings.

If you agree to do this experiment, please do not forget to restore your original settings after it finishes. :-)